The Contrarian

“In the investment markets, what everyone knows is usually not worth knowing.”

UBI-The Next Catastrophe

UBI stands for ‘Universal Basic Income.’ It’s a concept that is now being floated around with articles in the major media. It will be the next big boondoggle, after the QE (quantitative easing) of central banks has turned out to be dud.

Don’t take these as just “articles” though. We call them “trial” or “conditioning balloons.” These are plans already on the drawing boards. It just takes a public relations effort to get people to accept them.

Remember, late last year, we saw articles on eliminating high denomination currency notes. In Europe, it was the €500 note. At the same time, leading representatives of the “shadow establishment” wrote articles, and made media appearances, advocating the elimination of the U.S. $100 bill. The reasons: criminals use these, and they are easier to transport.

But criminals also use a lot of things, like cars to transport stolen goods. Should we eliminate automobiles to make it tougher for criminals? You know that the true reason is something else.

On May 4, the EU announced it was eliminating the €500 note. You can bet that the lifespan of the $100 bill will end soon.

Let’s get back to UBI. An article on Bloombergviews.com wrote that “politicians, economists and policy experts worldwide” are studying the idea. The government would guarantee an annual payment to each citizen, such as $10,000 per year, no questions asked. Currently, it would not depend on qualifying based on income. That makes it simple to administer.

The article said that Europe, Canada, and South American countries are studying this as well.

Bernie Sanders says he is “sympathetic” to the idea. Marco Rubio proposed the idea in 2015.

Paula Dwyer, who wrote the article on Bloomberg, writes:

Switzerland has scheduled a referendum on June 5 on whether to give every adult citizen 2,500 Swiss francs (about $2,600) a month. Ontario, Canada, will conduct an experiment with a basic income later this year. The city of Utrecht in the Netherlands is conducting a pilot program, and Finland is planning a two-year trial. A British proposal is gathering interest. In May, a nonprofit group will start giving 6,000 Kenyans a guaranteed income for at least a decade and follow the results.

Liberals say this would lessen poverty and inequality. Of course, no one mentions who will pay for this. What are the social consequences when it becomes even easier not to work because of all the welfare programs.

The author concluded: “With no eligibility criteria or enforcement needed, administrative costs would be bare-bones. Waste, fraud and abuse would be greatly reduced, the argument goes, if not close to zero.”

If you believe that governments giving away money leads to “less waste, fraud and abuse,” you probably also believe in the Easter bunny.

I can just hear people say, “this will never happen.” If we had predicted 10 years ago that the major central banks would create $13,000 billion ($13 TRILLION) out of thin air, they would have called us crazy. But it happened.

However, the signal is clear: governments and central banks acknowledge that they are out of ammunition and cannot produce a stronger economy. Of course, they will never try the only thing that works: let the free market, free of governmental regulations, produce the recovery. Thus the global economies will continue to be choked, at the same time that central banks administer one injection of adrenalin after another to keep the heart from stopping.

The payment to “everyone” will then be changed to special income limits, such as only for people making less than $50,000. Then they will start taxing it. Then they will make all illegal immigrants eligible. That’s how every governmental program grows.

The UBI will back fire, just like a governmentally mandated minimum wage. That means continued stagnation and distortions in the financial system caused by ever higher negative interest rates (NIRP). Imagine: now lenders of money pay the borrowers. It’s unreal. It has never worked. But with today’s nitwits running the show, anything is possible.